In a perpetual inventory system, the entry to record the purchase of merchandise inventory on account would require a
A) debit to the Merchandise Inventory account and a credit to the Accounts Payable account.
B) debit to the Accounts Payable account and a credit to the Merchandise Inventory account.
C) debit to the Merchandise Inventory account and a credit to the Cash account.
D) credit to the Merchandise Inventory account and a debit to the Accounts Receivable account.

Question

Quizplus · Accepted Answer

In a perpetual inventory system, purchasing inventory on account increases the Merchandise Inventory account (an asset) and increases the Accounts Payable account (a liability). This is recorded as a debit to Merchandise Inventory and a credit to Accounts Payable.

In a Perpetual Inventory System, the Entry to Record the Purchase